Insights 
VT 
The NZD/USD pair recently trades at around 0.5730, showing potential for a bullish reversal within a descending wedge pattern. The 14-day Relative Strength Index is slightly above 30, indicating a bearish bias. The pair’s short-term price momentum remains weak as it stays below the nine-day Exponential Moving Average (EMA).
Key Support and Resistance Levels
Primary support sits at the psychological level of 0.5700 with further support around 0.5670. Breaking below the wedge could intensify the bearish trend, with possible targets around 0.5485, the lowest since March 2020. The primary resistance to watch is the nine-day EMA at 0.5745, followed by the upper wedge boundary at 0.5770.
A breakout above this zone could shift bias to bullish, potentially pushing the pair towards the 50-day EMA at 0.5842 and possibly reaching a three-month high of 0.6008 seen in September.
The heat map displays percentage changes of major currencies, where the New Zealand Dollar shows varied performance against listed currencies. It was stronger against the Australian Dollar and weaker against others like the US Dollar and Euro.
As of October 17, 2025, the NZD/USD is trading around 0.5730, caught within a descending wedge pattern that signals a significant price move is on the horizon. This technical formation, combined with weakening bearish momentum, suggests we should prepare for a potential breakout. Derivative strategies that capitalize on a sharp increase in volatility could be particularly effective in the coming weeks.
Bearish and Bullish Scenarios
The bearish case remains strong as long as the price stays below its key moving averages. If the pair breaks its psychological support at 0.5700, a move down toward the wedge’s lower boundary of 0.5670 is likely, potentially retesting the lows near 0.5485 seen back in April 2025. This view is supported by recent fundamental data, including a 5% drop in the latest global dairy auction and New Zealand’s Q3 inflation slowing to 4.2%, which eases pressure on the Reserve Bank of New Zealand to hike rates.
Conversely, a break above the nine-day EMA at 0.5745 and the wedge’s upper resistance near 0.5770 would signal a bullish reversal. This could trigger a rally toward the 50-day EMA at 0.5842. Traders could consider buying call options with strike prices above 0.5800 to position for such an upward move.
The broader trend this year has been driven by monetary policy divergence, a pattern we expect to continue. Recent US non-farm payroll data for September came in stronger than expected, keeping the Federal Reserve on a hawkish path. In contrast, New Zealand’s economic indicators are softening, limiting the RBNZ’s options.
Given the uncertainty of the breakout’s direction, a long strangle strategy could be a prudent approach. This involves buying an out-of-the-money call option and an out-of-the-money put option with the same expiration date. This position would allow us to profit from a substantial price move in either direction while capping the risk at the premium paid.
